Page 22 - TACC 2025 Program
P. 22
The Strategic CFO: Unlocking Value
in Middle-Market Private Equity
Portfolio Companies
– continued
These practices foster a culture of accountability Case Studies: Financial
and allow CFOs to maintain trust with stakeholders, Transformations in Action
paving the way for accelerated growth and A middle-market company saw a significant
operational efficiency.
improvement in EBITDA by adopting rolling
Cash Flow Management and forecasts and aligning KPIs with the PE firm’s
Liquidity Optimization goals. This approach allowed the CFO to make
real-time decisions, optimize resources, and
Robust cash flow management is critical for create a stronger foundation for growth. In
middle-market companies aiming to sustain another instance, a manufacturing firm achieved
growth. CFOs must ensure liquidity while funding sustainable growth by implementing a 13-week
critical initiatives and avoiding excessive leverage. cash flow model. The CFO streamlined working
A powerful tool in this area is the 13-week cash capital cycles, freeing up millions for expansion
flow forecast, which provides short-term visibility without incurring additional debt. Similarly, a
into cash inflows and outflows. This approach PE-backed services company reversed declining
allows CFOs to anticipate liquidity peaks and profitability through cost controls and vendor
valleys, ensuring timely adjustments. For example, renegotiations, resulting in enhanced financial
optimizing working capital by improving accounts performance and a successful exit.
receivable cycles or renegotiating payment terms
with vendors can free up significant capital for Strategic Insights for CFOs
growth initiatives. in PE-Backed Companies
Middle-market CFOs must embrace a proactive
Cost management also plays a key role. CFOs
can identify inefficiencies, streamline operations, and strategic approach to maximize value
and negotiate favorable terms with suppliers creation. Agile financial planning practices
to enhance EBITDA. Coupled with strategic enable rapid adjustments to align with changing
capital structure planning, these efforts balance market conditions and stakeholder expectations.
growth funding with controlled costs, ensuring Transparent communication with PE sponsors
the organization is well-prepared for both builds trust and ensures alignment on key
opportunities and challenges. financial goals. By establishing strong cash flow
management processes and optimizing working
By prioritizing liquidity and efficiency, CFOs enable capital, CFOs can maintain liquidity and mitigate
their companies to maintain financial stability while financial risks. Operational efficiency becomes
positioning themselves for future success. critical for controlling costs and enhancing
